Abstract
This paper explores the information content of a business tendency survey on the service sector in Russia from 2012 to 2018. Two alternative survey-based indices were developed: a traditional confidence indicator as a simple arithmetic mean of the balance statistics of three respondents’ replies and a business climate indicator (BCI) as the first component of five balances. The latter indicator is expected to perform better in terms of tracking a reference quantitative variable (GDP growth). The survey results reveal a six-year negative trend in two composite indicators and the other balances of the respondents’ opinions. Despite a slight improvement in 2017 and 2018, the business climate in the service sector remains unfavourable. The dynamics of confidence and business climate indicators have a lagging nature relative to GDP growth; however, BCI performs slightly better in terms of a synchronous correlation. The shock in BCI in the framework of the bivariate VAR model produces a statistically significant positive response of GDP, which reaches a peak in the second quarter after the shock. The insufficient time series of survey results limits the cyclical analysis of BCI; however, BCI can be used as a main composite indicator for analysing the development of the service sector.
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Sources: GDP growth—Rosstat database (data on February 1, 2019); confidence indicator and its components—authors’ calculations
Sources: real disposable incomes—Rosstat database (data from 2014 to 2018 were revised according to the new methodology); pawnshop confidence indicator—authors’ calculations
Source: authors’ calculations
Source: authors’ calculations
Notes
Authors’ calculations based on UNCTADstat database; http://unctadstat.unctad.org/wds/TableViewer/tableView.aspx?ReportId=95 (Kitrar 2017; Kitrar et el. 2017).
Freight transportation was surveyed starting in 2017 only; the time series are too short for seasonal adjustment and are therefore not included in this paper.
Until 2017, the ‘old’ OKVED version was compatible with the NACE Rev. 1.1.
In BTS, balances are the difference between positive and negative answering options, measured as percentage points of total answers.
The lag length for the VAR model is determined using Akaike information criteria.
A zero value in balance statistics may not correspond to zero GDP growth, because of, among other things, asymmetry in entrepreneurial sentiment (Lahiri and Zhao 2016).
According to EC guidelines, insurance as financial services should not be aggregated with the rest of the service sector because of the idiosyncratic pattern in terms of business cycle behaviour; in this matter, the Russian practice differs from the European recommendations.
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The paper prepared within the framework of the Basic Research Program at the National Research University Higher School of Economics (HSE) and supported within the framework of a subsidy by the Russian Academic Excellence Project ‘5–100’.
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Kitrar, L., Lipkind, T. & Ostapkovich, G. Information Content of Russian Services Surveys. J Bus Cycle Res 16, 59–74 (2020). https://doi.org/10.1007/s41549-020-00040-4
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DOI: https://doi.org/10.1007/s41549-020-00040-4